8 Social Security Updates Advisors Need to Know for 2024

2. The child benefit reduction earnings limit is also raised to $22,320.

Children can also lose some or all of their benefits if they work and earn over $21,240 in 2023 or $22,320 in 2024.

A child’s benefit is subject to deductions due to work by either the child (unless the child is 18 or older and has a disability that began before age 22) or by the Social Security number holder on whose earnings record the child’s benefits are paid.

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3. The earnings limit for the year of full retirement age attainment is $59,520.

As noted, recipients can lose some or all monthly benefits if they are under the full retirement age for all of 2024 and their earnings for the year exceed $22,380.

A person may lose benefits if he or she reaches full retirement age in 2023 and earns over $59,520, but only those earnings earned before the month he or she reaches FRA count toward the $59,520 limit.

The amount of loss depends on the amount of earnings in excess of these limits, and in no case will a person lose benefits for earnings attained after reaching FRA.

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4. The quarter of coverage earnings minimum is raised to $1,730.

For 2024, an employee receives one quarter of coverage for each $1,730 of earnings, up to a maximum of four quarters.

This minimum is up from $1,640 in 2023.

As an example, consider an individual who works for two months in 2024 and earns $3,940.

This person is credited with two quarters of coverage for the year because she receives one quarter of coverage for each $1,730 of earnings, up to a maximum of four.

In order to receive four quarters of coverage in 2024, this person would have needed earnings totaling $6,920 ($1,730 × 4 = $6,920).

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5. The maximum OASDI taxable wage is set at $168,600.

Every employer who employs one or more persons and every employee in covered employment is subject to the tax imposed under the Federal Insurance Contributions Act.

The tax consists of two taxes: the OASDI tax (the tax for old-age, survivors and disability insurance) and the Hospital Insurance tax for Medicare Part A.

For 2024, the maximum earnings base (i.e., the maximum amount of annual earnings subject to the tax) for the OASDI tax is $168,600. This is up from $160,200 in 2023.

There is no maximum earnings base for the Hospital Insurance tax.

In dollar terms, the maximum OASDI tax for an employee in 2024 (with maximum earnings of $168,600) is $10,453.20 as an employee or $20,906.40 as an independent contractor.

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6. Disability income limits have increased marginally for 2024.

Generally speaking, a person who is not statutorily blind and is earning $1,550 a month in 2024 (net of impairment-related work expenses) is ordinarily considered to be engaging in substantial gainful activity — thereby potentially becoming disqualified from some or all disability benefits.

This represents an increase of $80 from the 2023 level of $1,470 per month.

The Social Security Act has established a higher substantial gainful activity amount for statutorily blind individuals. The monthly substantial gainful activity amount for blind individuals is $2,590 in 2024, up from $2,460 in 2023.

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7. PIA is calculated differently for newly eligible recipients.

Generally, a person's the primary insurance amount is determined by applying a formula to the average indexed monthly earnings.

Where first eligibility is in calendar year 2024, the primary insurance amount is the sum of three separate percentages of portions of the average indexed monthly earnings. It is found by taking 90% of the first $1,174; 32% of the average indexed monthly earnings above $1,174 and below $7,078; and 15% of the average indexed monthly earnings in excess of $7,078.

If the resulting primary insurance amount is not an even multiple of 10 cents, it is rounded to the next lower multiple of 10 cents. The percentage figures and the dollar figures in that formula will remain constant for computations and re-computations where first eligibility is in 2023, no matter when entitlement is established.

The primary insurance amount is calculated differently if eligibility begins before 2024. The percentages in the formula remain constant, but the dollar amounts differ each year.

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8. Three states have recently eliminated taxes on Social Security.

Taxation of Social Security benefits has recently been eliminated in Missouri, North Dakota and West Virginia.

Starting in 2024, Social Security benefits in Missouri will no longer be taxed. Before 2024, retired Missouri residents aged 62 and older with a gross income of $85,000 or more paid state income taxes up to 4.95%.

Taxation of Social Security benefits in North Dakota has been repealed, and in West Virginia, tax authorities have phased out state income tax on Social Security for many residents.

For the 2021 tax year, West Virginians that made $50,000 or less ($100,000 for couples filing jointly) were allowed to exclude up to 6.5% of the benefits they receive from Social Security. Beginning in 2022, 100% of Social Security benefits were free of tax.

For people with incomes above those levels, benefits are taxed according to the federal model. West Virginia’s income tax rates ranged from 3% to 6.5%.

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